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Worldwide Exchange

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

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China 33, Us 23, Europe 15, India 11, Mongolia 9, Spain 9, Banco 8, Russia 7, Italy 7, Glencore 6, Uk 6, Nokia 5, France 5, Euros 5, U.s. 5, Milan 4, Asia 4, Madrid 4, Oracle 4, Obama 3,
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  CNBC    Worldwide Exchange    News/Business. Ross Westgate, Kelly Evans. Ross Westgate and  
   Kelly Evans consider the business stories that have global...  

    October 1, 2012
    4:00 - 6:00am EDT  

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. welcome to "worldwide exchange." after months of digging, the board of ex-strata, the board finally proofs. official pmi for august contracts for the second month suggests measures may not be doing the trick. and shares are suspended in madrid of banco after they say they will raise $2.5 billion euros in capital to avoid state bailout.
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welcome to today's program. i'll wave that and come back to it. eurozone final manufacturing pmi, 46.1, the flash was 46.45.1 in august. september 45.9. flash 45.5. so manufacturing worse performance in three months since the depths of the great recession, factories hit by falling demand despite cutting prices. so they did help lift the services now also taking root in core members germany and france. a slight rebound from the flash number a couple weeks ago. meanwhile manufacturing factory activity in china has also contracted. that's improved just slightly from august. joining us with his thoughts on this, greg smith, managing director. thanks very much indeed if
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coming in. when you combine china pmi, eurozone pmi, not -- has this now all baked in the cake or what wins out, i suppose, central bank policy action or this economic data? >> still very much polarized. china, the debate rages. depending on your view there puts you in the camp of whether you're a borrower or long term buyer of equities. we're certainly in the camp china will do all they can to keep the growth level around the 7 level assuming they have the fire power to do so. a lot's been spoken about in terms of what the ecb going to do and support they're going to give and how they'll get spain
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and greece out of the mess. so it's a big among. >> meanwhile glencore shares are down after the news that ex-strata is backing the mega merger offer. they'll walk away with 9.6 million pounds severance pay. is the pay issue going to get resolved? >> could well be a sticking point. they've made some progress recommending the 2.8. so they're going for the 3.05. i suppose now having split the two, they can't be accused of trying to railroad the retention packages. a lot of shareholders will need more detail on the retention
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packages, who actually is involved, and particularly the likes of black rock and of course obviously they can still scrap the whole deal. >> mick davis will be walking away. how will shareholders view that is this ? >> looking at a pretty good deal for him. shareholders i think will be looking at that, but they also i think will be looking at the wider poll of who the others are, how they've been paid to simply turn up. not so much of issue of davis, i think it's the others. >> a vote structure is unique. corporate structure would be fairly unique. as aninvestor, what would you
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you think? >> interesting. people say this is a unique model combining model and training, but if you're an xstrata shareholder, you don't want the deal to go through. long term investors, what i said earlier about views being quite polarized, xstrata has a great product pipeline, so i think they're getting a pretty good deal. >> they're in this push/pause between chinese growth data and fed action. on commodities, what wins out? >> you obviously have a supply-demand fundamentals. biggest consumer is china, but we don't want europe or the west
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to fall over, as well, so that's why we need the central bank support. but if we get through the next 6 to 12 months, in-we'll be ba th back to the supply side. >> exports showed signs of weakening. at the same time, india's factory's managed to post steady growth thanks to a rebound in export orders. for more on that, we go to reema in mumbai. >> manufacturing pmi has come in unchanged. the figure stands at 52.8 and remember this index has been above the 50 mark indicating expansion for over three years now. the key reasons why september growth is up, output growth has been faster and the exports have
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actually grown. manufacturing pmi is at 53.8 and the first reading above the 50 mark in three months now. sos it is the big jump in exports that has brought in that number. the only problem is there has been inventory increase, as well, and that usually does not bode well for the future output. but in general from the india macroeconomic side, things have started looking over. we got current account deficit and that taps at 3.9%. was at about 4.5%. in the quarter gone by, there was a surplus of close to about $5 billion. and we just got the august trade data out, as well. imported out about 5.1%. and august trade data is more or less in line. on that note, it's back to you
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again. >> all right. thanks for that. gold a bit of a boost in the run up to qe being launched since -- >> yeah, consolidating. i guess we've seen a pretty positive correlation between qe and pursuing months. so i think we'll see it push higher. as we see the race to the base, it can only be good for the gold price and obviously an even more interesting place, the gold miners. >> i just want to point out this tie isn't because i'm long gold. it's actually because i'm supposed to be matching, see that, this is the -- >> you need to be in a blue tie. >> there's some yellow in there, fwr greg. should have worn a yellow shirt. >> next time. >> not that you should take any
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fashion advice for me. so what about the reaction to that chinese data? li has the details out of sync pore. >> asian markets were mostly lower, but mainland hong kong and south korea markets are all closed for public holiday. so that took a lot of liquidity out of the trade. china september official pmi figures had an impact, as well. the aussie dollar was put under pressure. the benchmark afx 200 ended just a tad above the line. steel maker rejected a $1 billion takeover offer. taiwan lost half a percent dragged lower by apple suppliers and glass and steel makers. the biggest contraction in ten months.
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over in japan, the nikkei hit a new three week closing low. steel makers and shipping companies lost ground after profit warnings, but soft bank made a $2.6 billion offer to buy the smaller mobile operator p south korea exports dropped for the third consecutive month. we'll watch how shares react when the market comes back tomorrow. sensex high he by 0.3%. back to you. >> thanks for that. here we are just an hour and 10 minutes in to the trading dae a day and weighted to the up side. 8:2. and it is the start of the final quarter. the dax was up 12%.
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third quarter. it's up 1% today. the cac 40 was up nearly 5% or so in the third quarter, up a percent today. we'll keep our eyes as ever on a lot of bond issuance coming out. thursday a big day on yields. ten year back below the 6% level. ten year italian yeeds, 5.14. keep our eye on treasuries. also uk manufacturing pmi coming out in about 15, 20 minutes. so we'll keep our eyes on that. my thanks to the fans, as well, who are supporting me right now. meanwhile euro-dollar 128.65. just rebounding at the moment. three week low after spanish banks failed to quell concerns. china pmi weighing euro-dollar down. and today shares in bank's being suspended in madrid after the bank approved a 2.5 billion
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right issue. this after showing they need nearly 60 billion euros more to expand the shock. the same time, the spanish government has said that the extra aid would push its budget deficit 7.4% of gdp in 2012, which is above the eu's target. so i don't know how she moves around so quickly from place to place, but from athens to madrid, here is julia. >> thanks very much, ross. you just have to bear with me if i make another freudian slip on greece versus spain. but right now, what we heard from the government over the weekend was that their deficit will be on target at 6.3%. but if you include the bank aid as you mentioned, 7.4%. they did make great pains to point out that european commission officials have not asked them to make any adjustments to reduce that number, but the question has to
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be asked what happens if they don't meet the deficit target of 6.3%. many analysts are expecting them to come in around 7% in terms of the target for this year. day take last week actually showed that the central government deficit came in just around 4.3% up to august. how, the full year target is 4.5% and then we're not even bringing in the regions. historical data suggests the situation doesn't tend to improve into year end, so we could be in a situation perhaps where if we see a request from aid from spain over the next month or so, we bear in mind the fact that we've got two elections coming up in the regions, too, they could be almost in terms of the requirements from the ecb breaking against that before the first review. so what does the ecb do in terms of bond purchases given that they're meant to suspend them? does it mean we have to see additional reform measureses? the message from brussels has already been that they can't ask more from them from 2012, but it's another open question. now, bringing it back to the
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banking sector as you mentioned, 60 billion euros for these banks in an adverse scenario. spaniards believe that they can get the banks to raise 20 billion euros themselves and banco has kicked off with a 2.5 billion euro capital raise. that leaves 40 billion to come from the 100 billion that's been allotted. the other thing that we need to find out is what will happen with the bad bank and we're expecting details on that. just what is the value of as sets that will transfer into that. so information on that this week, plenty to come from spain. back to you guys how, hoe. >> and it's just me unfortunately. i should have said earlier, kelly has got the week off. i think she's rather happy that she's not here bearing in mine we won the ryder cup. she thinks for some reason i would have talked about it a lot. surely pot. other things we're looking today, protests in france. thousands marching to voice
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discontent with the european fiscal pact. the first major display of backlash since hollande was elected in may. plenty of other things still to come on today's show. the latest survey out of japan shows sentiment weakening. we'll be in tokyo next to find out why one investor is focusing on a bright spot. former unicredit boss set to expand at his trial. we'll be outside the courthouse for the latest. and why cruises are betting on china and brazil. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad
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we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. save 50% on banners.
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incredible sporting comeback. europe has won golf's ryder cup at medinah. holding out the precious 6-foot cup to retain the trophy. trailing by four points heading into the final day, european play stormed back. that polimissed effort by tiger woods saw europe gain a half point needed to win the cup outright.
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i feel i should cut that camera to change the mood. business confidence in the world's third biggest economy continues to take a hit. sentiment fell in the july to september quarter. this according to the central bank's survey. falling output and exports have taken a toll along with rising worries over strained relations with china. the one bright spot, the mood in the service sector which remains much higher. japan also has a new finance chief after noda reshuffled his cabinet. largely expected to stick to the reform plan. in all ten new faces were brought into the cabinet including the economics minister and he's been urging the bank of japan to take more action, as well, on the economy. ed rogers is ceo of rogers
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investment advisers and he joins us now. ed, was that one bright spot in the tank enough? >> good morning, ross. i think actually there were two bright spots. cap ex- is expected to rise at much higher rate than previously expected. those are good things. the fact that in the short term we have a bit of a down tick in enthusiasm and a lot of that could well be placed at the doorstep of the china and japan spate over these islands, i think we'll get past that. overk we'll get past that. even employment remains low and you look at the service sector sentiment, this is what we want for japan. we want japanese to spend more money. we want greater consumption from the consumer sector. that's it actually a positive. so it's not all bad news.
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>> you call it a spat over the islands. plenty people consider it far worse than that particularly as we have put up a hard line on this issue into the cabinet. >> spat is perhaps an understatement, but they need to cooperate far more than either country would like it see them at each other he's throats. i think the move by the japanese government to purchase these islands to keep them out of the hands of any potential extremist group should be viewed in a very favorable light overall. the january p sneeze government does not want this to grow out of control, nor does the chinese government. tension certainly is rising and the man on the street is feeling passion about this issue. that's understandable. in the medium to long term, both governments want this to tone down and it will.
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>> let's hope that pans out. meanwhile all this cash that companies have, you were just talking about this, do you expect cap ex to continue to pick about up? >> i do. there's an awful lot of money sitting on the seed lines us a was noted back in an article back in july/august. almost 44% of the total value is held at cash in company coffers. this money needs to get spent. needs to get spent expenditures, hiring new staff. sitting in the bank is not helping anybody. >> who is spending shall steel makers, equipment makers more
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gloom about business conditions, sentiment deteriorating sharply. they expect domestic demand to falter, as well. in that mood, they won't be spending anymore money, are they? >> well, again, as the survey had indicated, some of the larger manufacturers are amongst the most gloomy. so that would bear out what you've just said. but japan is more than a bunch of large manufacturers. it's the world's second largest developed economy. there are many places here where money can be spent. and we think going into 2013, we'll see afternoon more proceed being a i have government response to spending. we think we'll see a much more aggressive bank of japan. working on bringing down the value of the yen, working on the pro inflation stance. if we see the bank of japan act rewritten, we could potentially see a 2% or 3% inflationary target on on the part of the bank of japan.
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that could unleash all sorts of positive good news. >> what more could the bank of japan do some because the yen is a victim of global flows rather than anything particular to japan, isn't it? >> well, that's part of the equation. japan without a doubt is the least worst off of many major economies and that's reflected in the strength of the yen. europe has kind of been a disaster for many, many months now or many years now in fact. it's great to see them win the ryder cup. maybe they'll get more confidence and start to get their act together in other ways politically as well as the sports world is concerned. we in japan essentially are suffering from a very strong economy on some levels relative to others. that we think can be fought at the bank of japan level with a commitment such as money can be
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spent to support -- >> ed, i have to go. i'm pleased you you you mentioned the ryder cup. don't know what it is, but apparently it's gone well. we'll get the latest read on manufacturing out of the uk.
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these are the headlines. after months of digging, the board of xstrata finally recommends the offer, but it comes with conditions. executive pair and shareholder vote remain as hurdle. eurozone heading for recession according to the latest pmi data, the worse performance in the manufacturing sector in three years. and official china pmi for august contracts in the second month suggesting past stimulus moves may not be doing the vehicle. trick. >> we have september manufacturing pmi out of the uk, 48.4.>> we have september manufacturing pmi out of the uk, 48.4.trick. >> we have september manufacturing pmi out of the uk, 48.4. august 50.6, september 50.2, but export orders are falling faster. the pmi shows falling employment and a jump in cost pressures
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according to markets. manufacturing sector shrinking more than expected. alan clark is uk commerce ban and joins us with his reaction to that data. >> something for everyone in there. although the headline was down, orders were up. domestic fundamentals in the uk reasonably okay. a lot of policy stimulus there and manufacturing pmis at least four points stronger than anywhere else in europe. so it wasn't great, but it wasn't a disaster. >> they say overseas sales continue to be hit by global economic growth. eurozone biggest export market still for the uk and we're trying to change that, but still going to have a huge impact. >> manufacturing sector is very much internationally exposed. it won't be great news for that sector. the other dark cloud is the cost pressures flaring up again and that's a headwind to everyone no matter what sector you're in. so we won't be in a rapid
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recovery anytime soon. >> you talk about domestic economy, this is -- the small increase in new business was on the back of strong demand for consumer goods. >> we saw in last week's gdp data that house hold income did pretty well. inflation has come off a lot, employment is up. it's now or never. those employment gains won't stick around much longer. inflation may dip done a little bit more, but not much. so we're really in a sweet spot now. >> how much of that employment is temporary? >> i think we've generated about 400,000 new jobs so far this year and only about a quarter of those are in london and the southeast. so you can put down that 100,000 to maybe the olympics, but there's about 300,000 outside of the capital that was due to something else. and underlying growth doing okay, but you won't see this sort of job growth given the sort of -- >> bank of england meeting this
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week. paul tucker was questioning the limits of qe-3. does that suggest to you that there won't be it anymore or that we might ramp up fls or more funding programs? >> i'm dreading the november meetings. it really is a close call between more qe or not. i think the fls is the favorite policy measure, but it will take time. all we're going to see at the moment is lower new lending rates, not any tangible increase in drawdowns for some months to come. so whether they're impatient and deliver more qe in november or just hold out and wait to see if it works, i think it will be a miracle cure. they need to target existing stock. >> and are we now expecting slight loosening of the budget targets? is that already sort of baked in, get to the end of the year, they'll agree we won't meet, it won't matter?
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>> and i think even fitch this morning or over the weekend said that's all right, if you increase austerity, then you're more at risk of a downgrade. so, yeah -- >> even the ratings agencies agreeing now. if you can buy your own debt and have your own -- not that the currency has weakened much. >> we're getting away with murder probably. >> yeah. still, could be worse. could be the other guy, right? i suppose that's the point. thanks very much indeed for that. did you say you think we're getting away with murder? >> well, look at our deficit. france is on track to get budget down to 3 to gdp. we're double that. >> do you think that will happen in france, the tax rates? >> it's a nice story, but all the budgets have been way too optimistic.
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it's not i78 possibmpossible, b challenging. >> all right. my quote of the day already. sterling in reaction to that hasn't moved an awful lot. as far as -- i get so used to looking at my old camera and i'm not looking at this one, so i do apologize. euro-dollar at 128.79, dollar yen steady, as well, not huge moves. we are firmer the first trading day of the last quarter. yes, it's all downhill or uphill to christmas depending on your point of view. ibex up 0.8%. spanish yields are lower this morning ten year below 6%, 5.92. italian yields also slightly up 5.14. meanwhile plenty of folks on spanish banks, shares have been suspended, that's why that's in black after they approved a
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right issue. it will report record write downs of 9.3 billion euros. and former unicredit ceo is set to stand trial in milan and other executives over allegations of tax fraud. that trial is taking place in milan and that is where claudia joins us now. claudia, just sketch out for us again the outline of this case. >> well, the case that begins today against the 20 defendants involved in this operation, it they're being accused of having frauded the italian tax system. what they say is that they apparently put in the books some income as dividends and that very simply would reduce the taxes because the dividend are taxed at 5% here in italy.
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so it looks like that went on from 2004 to 2009, so that's a long period of time in which what was accumulated was a fraud of 245 million euros. the trial is expected to begin today. it's been postponed to 11:30. it's not expected that alleghs is an droe will show up. he was ousted from unicredit with a 40 million euro package and of course a lot of scrutiny on what he had done. he had done very well and became sort of a superstar banker, and really strengthened unicredit, but then in the last years was being scrutinized for mergers at the end of his tenure and of course the crisis that hit post lehman. so he's taken on that position and apparently it was more just a guarantee position and now he wants more powers. on the 9th of october, he is asking to be allowed to sell
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assets and also to become involved in management decisions. and of course you are of course getting public opinion that is concerned about a banker that after so much scrutiny is actually going to be taking on so much more responsibility in a time when he is going up these steps or maybe not himself, but going to be accused of tax fraud. as far as unicredit is concerned, they have sort of plea bargained with the fiscal situation here and have paid out 265 million euros. they say no wrongdoing was done, but he was doing it in order to just kind of put it behind them. he says he has done nothing wrong and is waiting for the justice system to take its course. ross. >> we'll see what happens. thanks. good to see you. s also staying in the sector, credit agricole has confirmed it will sell it greek bank to alpha bank. stefane has all the news.
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>> they confirmed they've start xd clus sif negotiations with alpha bank. and they're planning to cheech the transacti achieve the transaction by the end of the year. it's also credit agricole to recapitalize the bank. they would have to inject an can tishl 550 million euros into on top of the 2.3 billion euros recapitalization and would also subscribe to 150 million euros in convertible bonds to be issued by a alpha bank. so it would make an additional contribution from credit agricole of 700 million euros. the bank says that the transaction would be part of its plan to reach the newel solvency targets by the end of 2013, but it doesn't say if it's going to be enough and in total the greek
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adventure cost the french bank nearly 10 billion euros. a decision is expected very shortly. a board meeting on wednesday and could make a decision on the deal. >> let's also look at eds. another story making -- a major sharehold shareholder. what are they saying about the possible merger? >> they are rejecting the plan which according to the company, doesn't prove that it's going to create value for eads and it should better take into account of interest of the french orders basically. they say the merger would dissolve the current shareholder agreement. they would face dilution and would lose its status. it would remain a main shareholder of the company, but won't be part of the shareholder
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spec anymore. remember that the chairman of the eads, and the bosses of the two companies, claim that the merger is going to create some value, that the whole group -- it would produce a group greater than the sum of its parts. >> all right. stefane, catch you later. the world's second biggest crude steel producer after a merger. let's go more to nikkei for mor. >> one of the main strengths of the new company is patent advantage. it has over 900 published international patents, more than any other steal maker.
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this enables the company to devalue high added products. the shares fell 1.2% on their first day of trading. investors were mostly concerned about a slump in steel demand amidst economic slow downs in china and elsewhere. incoming ceo agrees that market conditions are unlikely to improve for the time being given worldwide capacity. to stay competitive, he will expand and speed up cost cutting measures like consolidating plants. remember, the company already laid out nearly $2 billion in savings. ross, back to you. >> thanks for that. have a good evening there in tokyo. now, things are looking a little better for global airlines. there may be bluer skies ahead as passenger and cargo traffic
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expand. up rough lay bily billion dolla. and chief analyst at the center for aviation joins us now. hey, brendan, good to see you. so look, according to the article, things are looking a little bit better. how much better in your view. >> skies are bluer, but certainly not blue just yet. we're talking about a billion dollar improvement for an industry that generates 700 billion per year. so pretty small change. i think what happened is they gloomy in june about the impact of the eurozone crisis in particular on airlines from other regions. and what we saw was the impact wasn't quite as bad as expected for the second quarter and the out lo outlook for next year is
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slightly better. but not the rosiest conditions just yet. >> generating this kind of a profit six year as go would have been unthinkable, so how have they changed things around to cope with that he pperspective? >> there's been a lot of cost cutting and also management improvements. so the airlines in that context have done quite well, but we're talking about an industry that has very low margins still, will continue to have low margins next year. and interest from investors globally in the airline industry still relatively low. i don't necessarily see this particular forecast having an impact on investor sentiment in the global industry. >> north america profits of 1.9 billion. asia pacific, 2.3 billion profit. but so much cargo activity in
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that region. how much of that business is the big swing factor? >> it's very hard to manage a business away from that because on the passenger business, you can't just lower fairs to stimulate cargo. the cargo has to be there from the manufacturers and from the general economic environment. but next year, the car go industry might pick up a little bit. the conditions for cargo are still very bad now. but again, overall the industry of course is still more passenger than cargo. and it's been a bit of a double whammy this year because for the long call carriers operating out of asia, they're heavily exposed to markets like europe where there's been an impact. >> are we going get anymore meaningful consolidation? i don't see eus saying to america you should really allow
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for proper mergers between european and u.s. airlines. do you think that's ever going it to be allowed? >> there's still a lot of steps to be taken to allow that to happen. true global consolidation, a lot of countries still have policies that limit foreign investment in the airline sector. so we need to see a lot of changes in the regulatory environment to allow that to happen. in the meantime, we did see a lot of consolidation continue to happen within regions like latin america, like north america, like europe. and asia is a bit more difficult because you didn't have common market like you do in europe. joint ventures and partnerships, so some benefits can be realbut still doesn't really allow for that. >> it's not the same as doing the full monty.
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brendan, thanks for that. good to see you. just a quick programming note. tomorrow we will bring you a first on cnbc in an interview with the director general, he will be joining us on cnbc. i'm not sure if he's on "worldwide exchange." anyway, on the agenda in asia tomorrow, australia central bank is holding its policy meeting, widely expected to cut rates, but analysts are pretty divide order whether they'll pull the trigger tomorrow. retail sales figures, also. still to come, the mining boom in mongolia has fueled one of the fastest growth rates. more in our trade links special next. bob... oh, hey alex. just picking up some, brochures, posters
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copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. ow save 50% on banners.
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mining boom in mongolia has fueled one of the fastest growth rates as gdp expanded 16.7 in the first quarter, can double the pace of china. a mining expert says the industry is well placed to weather an economic slowdown.
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and i spoke to him and asked him about among gomongolia's relationship with its closest neighbors russia and china. >> it's a sensitive political question for among gomongolia. certainly key to maintain good ties with both china and russia. however, at the moment, from an economic perspective, china is by far the most important trading partner for mondgolia. >> why isn't russia getting more involved? >> russia certainly is interested in among gomongolia, but in one sense it views it as a competitor. russia has vast resources available.in one sense it views
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competitor. russia has vast resources available.one sense it views it competitor. russia has vast resources available. in a way is competing with mongolia with the world export market. also geographically, it's a greater distance from mongolia. >> we also understand rio tinto is looking to open up what could be the third biggest copper mine. what can you you tell us about it that and mining companies that are operating there? >> sure. the rio tinto project which is owned through subsidiary controlled by rio tinto called turquoise hill, a canadian miner, kernl asserts operational control over the copper and gold mine in mongolia and it certainly is a huge resource. there's around 40 billion pounds of copper and around 20 million tons of gold estimated at that site. and it is a huge investment.
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there's massive infrastructure development around there. it's around 40 kilometers from the chinese border, so relatively proximate which has an advantage in terms of importing the product there. at the moment, i understand around $5 billion has been invested by rio tinto in the project and the total project costs around $13 billion. so certainly an important -- it's a very important project for rio tinto and strategic importance for mongolia itself. >> would he have seen a bounce of commodity prices post the launch of qe-3, but the bigger determiner of prices will be the chinese economy. if it continues to slow, how exposed will that leave mongolia and the mining companies operating there? >> i think it will leave among goal i can among fwl i canmongolia exposed.
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however unless we soo a complete economic meltdown, which is highly unlikely, comphina will still require cheap product from mongolia. and its cost of production is a lot lower than for example australia and canada and has the advantage that it doesn't require seaboard transportation for the product. it can be transported at a lower cost over land. the result is that china can purchase the product at a lower rate. it realizes that mongolia has limited options in terms of exports. and my understanding from speaking to he companies and buyers that it's around 50 cents to a dollar in terms of coal imports into china compared with the price being paid by chinese companies or australia. >> for more, go to our website,
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tradelinks.cnbc.com. an update on some of the other shower, glencore shares are down while xstrata inched further into the green on news the boarded members are banking the merger offer. a vote on the contentious retention package has been pushed back to a later date allowing the deal to go ahead at the moment. they'll walk away with 9.67 pounds severance pay. a new "washington post" abc news poll shows 49% of likely voters favoring the president versus 47% for romney. amongst all registered voters, obama hold as five point lead, but 52% of them are being a stros swi acrosses swing states, they favor the obama.
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the debate starts wednesday at 8:00 p.m. eastern. and if president obama is reelected, one of the first job may be to find a replacement for geithner. the wall street journal reports the white house chief of staff jack lew and former clinton chief of staff are two top candidates. both budget experts and could play a major role in the looming fiscal cliff. nokia's into another big customer for its mapping software. the "wall street journal" says the company will unveil a deal with oracle today in san francisco. nokia also recently signed deals with groupon and amazon. nokia a got into the map business with it purchase and has been expanding the service. and back to the banks, shares in
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banco have been suspended. the bank has announced it will report record write downs of 9.3 billion euro this is year and have suspended its dividend this month. julia has more reaction to what they're saying. they'll launch the share increase by mid november. do you think they can avoid having to ask for any government assistance? >> i think they're certainly going to try. but in terms of their market, it will be highly diluted, so it depends on how well it goes down with investors. the stock should open up in about ten minutes time. we've had a couple brokers lower their price. they also have also announced that they plan to see a capital
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increase of around 2 billion euros as a result of divest hims. it's actually lack of clarity on the details of that that have resulted in a lowered estimate for the share price. as you mentioned, record provisions this year. they have to try to get the capital shortfall down to 2 billion euros by december to avoid seeing a capital injection in the short term. so that's -- if they're not successful in november, they're really pushing it in on the to in order receive the cash. and they said they'll set up their own bad bank. thousand sure how that's going to work given that the government itself is looking at a bad bank. we're expected to get details of that this week at least. so plenty of details out there. the government has also said that they expect 20 billion euros to be raised by the banks themselves. so more to come where these seven banks that need capital according to the stress tests are concerned. back to you. >> and i suppose we just have to see whether the 60 billion they need is actually enough anyway,
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isn't it. plenty more forecasted that it's up to 150. so we'll see what happens. stick around, we'll see you in the second part of the program. any thoughts or comment, worldwide@cnbc.com or you can tweet @rosswestgate. kelly is available today and in fact until next tuesday. i think she wanted to avoid any ryder cup fall skrout. still to come, as the third quarter comes to a cle, find out your best bets for the last three months of 2012.
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this is worldwide exchange. i'm ross westgate. after months of digging, the board of xstrata finally recommends glencore's offer, but with conditions. shareholder vote on exec difference pay remain as hurdle. eurozone headed for recession according to the latest pmi data which shows the worse performance for the manufacturing sector in three years. and official china pmi also contracted suggesting past stimulus moves may not be doing the trick. plus we remain focused on banks. bank company popular expected to resume trading today.
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if you're just tuning in, kelly of course has got the week off, so i'm on my own. apologies for that. and we are higher on the first trading day, the fourth quarter started, which means all uphill or downhill into christmas depending on your point of view. nasdaq currently trading some 15 points above fair value, s&p 500 at the moment well over six points above fair value. this follows a pretty positive start, positive if you're long on the markets for european stocks. as represented as well in the foot city global 300. up for the highs for the session up 15 points. ftse up around 3% for the quarter. today it is up if you take a
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look at it up a percent at the moment. ibex currently up 1.3%. bond yields coming down today. so in terms of spain and italy, which is the ones we're focused on, below 6% for spanish 1e7b year, yields lower in italy, as well.year, yields lower in italy, as well. occurrence ci euro dollar has bounced up during the session. dollar-yen 78. aussie dollar was dragged lower by those china pmis. again, just bounced off those lows. sterling slightly weaker on the back of the uk manufacturing pmi numbers that we also have out this morning. so that's where we are in the european session. let's recap the nation trading day. all the details out of sync pore. >> asian markets under pressure
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today, but volume was light because of the respective holidays. there are ongoing concerns in spain, aussie dollar rebounded a little, but under pressure ahead of tomorrow's rba reading. benchmark ended just a touch higher helped by banks. steel maker rejected a $1 billion takeover offer from an asian consortium. elsewhere taiwan was dragged lower by apple supplier and glass and steel makers. over in japan, the nikkei fell to a new three week closing low. this after weak manufacturing sentiment and a couple companies announced profit warnings. south korean exports dropped for
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the third straight month. we'll watch how the markets react when they resume trading tomorrow. that's all from me. back to you. >> okay. thanks very much for that. now, an incredible sporting comeback, europe has won the ryder cup. i'm not sure what it is, but apparently we've done it rather well. europe was trailing by four points going into the final day, but they gained a half point needed to win the cup outright. right.
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let's move back to employment details. no more needs to be said about that. or maybe just a little bit. i actually have the employment data out. i was watching the pictures. i don't normally watch the pictures when i read stories, but today i actually was watching the pictures again. unemployment rate is 11.4%, it was 11.4% in june. 80.it 80.2 million in august, which is a record high. readings from spain and italy have moved higher from the initial estimate. france and germany still feeling the downward pull with no improvement in europe's strongest economies.
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analysts say it suggests fine tuning measures have so far failed to boost growth. they were helped by rebound in export orders. those rose for the first time since june. this is according to a private survey. india's manufacturers could face a big build up in inventory which is might limit production in the months ahead. that's the news so far today. what are investors to do? joining us is james beven. investment management. good morning to you. as third quarters go, pretty good performance for equities. >> and i think we can expect the same in the fourth. the news is poor. >> so we can expect better equity performance? >> we should expect more action from the central bank.
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reasonable chance coordinated easing. >> can we have anymore action from central banks? everybody's at it already. what more are they going to do? the fed won't do any more than it's announced. >> what's critical is that we have negative interest rates for a 5 to ten-year period and that is the sort of environment that ultimately will support equity markets. we're hearing the central banks say well will do anything we can, if necessary print money. so in a sense, the worse more bad news can be, the more likely it is that we will get early action. mr. draghi is likely to sit on his hands at the meeting this week. he'll say i i want to see results before i know what to do next, but markets will look through that to anticipate that he will take action. >> okay. so if you take a look at the dax up 12% in the quarter, up seven
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of the past nine months. i mean, those metrics, you would have been very happy at the beginning of the year. why wouldn't you if you had been on that, why wouldn't you just say that's it? >> because the corporate earnings numbers which clearly are deteriorating generally speaking and there's how much you pay for current and perspective earnings. valuations still remain relatively modest, but one should be prepared to pay to participate in equities based on the likely scenario. valuations are still way too cheap. >> really? >> you raise your eyebrows. have a look at the al valvaluat equities and you have to ask yourself the question am i right in predicting negative bond yields. if i am, it's a bonanza today. >> so key is bond yields.
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>> i think that's a critical part of the recuperation. it will take another five to ten years to work through that. but meanwhile, equities ought to trade higher. >> let's talk about bernanke. he's speaking to the economic club of indiana at 12:30 eastern and will take questions. "wall street journal" reported friday that bernanke worked behind the scenes for months to get support for qe-3 which was approved by the fmoc by an 11-1 vote. so what's interesting, because bond yields are quite a bit below where they were when the fed announced that program. normally with these things you
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sort of get the benefit of them in the run up and then they go the other way. >> one of the interesting issues is if you're going to print money, you have to expect a massive spike in inflation. quantitative easing does that necessarily mean higher inflation. what was clear is that qe was backfilling the value destruction the banks had experienced and it was a necessary step to maintain stability. >> it is interesting because what people would argue is that it does raise asset prices that are causing inflation in energy, food. >> absolutely right. and what's critical is that everybody now believes there will be some extra inflationary pressure in the system and that's extremely good news.
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luckily i think the risks are off the table and one can be supportive of equities in terms of higher valuations until inflation gets in excess of 4 percentage points, at which point people begin to worry about what will happen to the quality of earnings. >> the key thing here is the corporate take of gdp has never been at such a high level versus -- and wage earners take gdp as a pretty low level on a historical basis. i suppose the question is that going to remain or is there anything that will tip the employee share back? at which point things will change. >> you're right, it's pivotal to the levels and whether they can be maintained. there are two factors that allow me to feel more confident. first is the government policies are pro recovery coming from corporate as opposed to try and get workers to have higher
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incomes workers themselves don't have price impact power in the marketplace. global trend is still depressive in terms of the bargaining power that workers can exhibit when they come to the table to negotiate. >> all right. good to have you on. any thoughts or questions for james, send them in. thousands ofbe back with the lat from paris.
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recap of the headlines. the board of xstrata's finally recommended glencore's offer. but with important conditions on pay. eurozone pmi points to fresh recession while china factory slump continues. and shares in banco popular are set to resume trade after the bank's announced a 2.5 billion euro rights issue. spanish bank shares still very much in focus. banco popular is suspended until for about another 45 minutes. this after the bank approved a
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2.5 billion rights issue due mid november before the bank has announced it will report record write downs of 9.3 billion euros. it'ses suspended its dividend due this month after an independent audit of the company's lenders showed they needed an extra 60 billion euros. at the same time, the spanish government said the extra aid will push its budget deficit to 7.4%, which was above the eu's original target. julia is in madrid. that's if you believe those numbers because there's plenty of people out there saying that extra 60 billion doesn't meet half of the requirement. >> absolutely. if you look at what rbs is saying, they're saying the country will need over 130 billion euros over the next three years.
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they do have this facility of 100 billion euros should they need it. i'm quite surprised actually by the fact that the markets can disregarded it, but it's only 3 billion euros shy of the amount that we have in the last from the bank stress test. so it's a moot point how much they're going to need. i think the other issue to remember of course is that these badges are being financed heavily by the ecb, 370 billion euros plus that's around a third of the gross funding from the ecb and in terms of the assets of the spanish financial sector, we're talking about 11% of them financed by the ecb. you only have to consider that to understand that this situation isn't sustainable and how essential this recapitalization plan is. we also expect to get more details of the bad bank plans this week, just what is the value of the assets that will be transferred into that bad bank because that will will make a huge difference, too. the other thing to remember of course is moody's, they said
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this morning that it is positive but that in t. might not be enough. and they also said the 60 billion euros is less than what they see . they're expected to make a move any day now perhaps on on the sovereign rating of spain. and if they do decide to move could take them below investment grade. so plenty of things to continue to watch in spain. >> absolutely. thanks for that. apparently i misspoke and the stock could start retrading at the moment. so anytime between now and, i don't know, 40 minutes it may start trading. if it does, we'll bring you the price. meanwhile thousands have marched through paris to voice discontent with the european fiscal pact. the first major display of popular bank lash since hollande became president in may. stefane has more details. >> yes, and with a social government in power, you would
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expect protests from the right wing. that was not the case. yesterday it was organized by the extreme left. 40,000 people in total according to the organizers. they were in the street to protest against the fiscal pact which is going to be discussed by the french lawmakers in the next in two days. it's being sorted by the social list and main central right government, but extreme left opposed to the fact and also the demonstration took place just two days after the government unveiled its budget for 2013. 30 billion euros of additional efforts, that was announced on friday. 20 billion euros in additional taxes mainly focused on richest people. and 10 billion euros in spending cuts. so that's basically what the demonstration was against on sunday. over to you. >> all right. thanks for that. james, you made the case
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equities and the question is which equities. >> i think there are interesting stories out there. first of all, i would argue that real assets deserve to be repriced. so plays on real assets are extremely well positioned. would should the yield on commercial property be. i call for a significant rerating. and equally there are companies associated with real estate, which i suspect deserve to be substantially rerated. on top of that, i do think that there are proxies in parts of the world and i'd be putting my hand up to support some of the cyclicals. what worries me quality growth is really overcrowded. valuations look rich. so i'd be looking at good quality companies like bmw,
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cisco, oracle, companies that i think look well placed to deliver better than analysts currently project. >> gold 2,000? >> you look at what's happening to the yields on u.s. inflation linked debt, you have to argue that $2,000 looks to be the right price for gold. i know a number of people say it should go lower, but look at the history books. they should see what the great names have written on gold. >> all right, james, thanks very much for joining us this morning. we'll take a short break. still to come, is it smooth saling for the cruise industry? we'll be joined by the ceo of world caribbean about whether he seas calm waters.
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banco popular has restarted its trade. stock down fairly heavy as you might expect. currently down 9.4%. it's planning to make it 2.5 billion share issue by the middle of november. not planning to make any acquisitions in the short term. but this is a bank that is very keen to avoid having to take any public or state money. so that's why we have the share issue coming up in november. no surprise the stock down heavy as a result. we'll move on to transport.
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the international air transport situation has revised its outlook. now rye difficupredicting up ro billion from its initial forecast in june. and to the cruise industry, world caribbean expanding its fleet of ships. so are emerging markets the future? joining us is adam goldstein. thanks very much for joining us. you hiked dividend payout. i'm guessing that's reflecting a degree of optimism. what's it based on? >> we're trying to balance getting returns to our shareholders, obviously managing our credit profile, and we felt that our business model even in relatively challenging times permitted us to hike the dividend and the board supported that. >> and how do you manage the sort of return to shareholders with the inevitable investments
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you have to keep making in new ships? how important is the investment program in new ship shs go? >> the history of the cruise industry is that the cruise lines that develop and grow with new cruise ships succeed. we put a tremendous amount of effort into building the most exciting cruise ships in the world, so our shareholders understand that those type of capital commitments are a part of the business model. and that we will grow in orderly fashion. >> but are you going to have less because of where we are economically? you have new markets. do you take the existing ships and use them for new markets or do you you -- and when we won't build, we're going on to not build so many as we might have done, or do you say, no, we keep investing for new ships and new markets? >> the rate of growth of the industry and our company has decelerated somewhat in the last four or five years. which means to take advantage of kree merging market
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opportuniti opportunities, we have tougher decisions to make about where to allocate capacity. so we've been reinvesting in the ships that we have, putting new features in the exiting ships as well as building some new ones, and then we make decisions about where to put them across asia, latin america, north america. asia. >> and explain to me the break down of the market in terms of who is still spending money and going on cruises? geographically and income sectors. >> cruising is somewhat of an upscale purchase, but our demographics are not so wildly upscale. i guess could you say average household income would be something in the vicinity of $60,000 or 70,000 pounds or $100,000 p abo1 o00. average age is 44, so we basically capture everybody that takes holidays. and that's a fairly broad
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demographic that we're after and the nice thing is that we're seeing people across the whole world catch on to the value of cruising. >> fuel costs are extraordinarily high. do you hedge those out? >> we do have an active hedging program. typically two years out from the current day, we're about 50% to 60% hedge, so we pick up hedges to keep that ratio going forward. as prices have been increasing over recent years of course that hedging program has been very beneficial to us. but you're right, the pressure that comes from higher fuel prices has been an important element of our business model in the last five, six years and we're intensely cognizant of using as the fuel as possible. >> 22 vessels. i know you have a package called the barbie premium package. what is that?
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that's for younger members, is it, when they go into -- i suppose some sort of child program. do they about pull in a lot of business? >> we found with partnerships such as dream works and starbucks an in this case barbie which is mattel, presenting elements interesting to families, bringing them into the on board environment, they find very, very compelling. we found when we put the first rock climbing wall in our ship in 1999. so families with young girls interested in barbie can now come on our ship and as a part of our youth program, there will be certain programming elements related to barbie dolls. and if you're really into it, you can pay for the premium package. >> director wants to know
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whether there's a ken side, as well. >> apparently not, at least nat ken premium package. >> and on that note, we'll leave it. thanks very much for joining us. still to come, profumo faces tax fraud and plus the all-important results from chicago's golf course. something called the ryder cup.
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you're watching today's "worldwide exchange." i'm ross westgate. these are your headlines from around the world. eurozone heading for recession according to the latest pmi data which shows the worst performance for the manufacturing sector in three years. in a can't sha china can't shake its slow down suggesting past stimulus moves may not be doing the trick. and banco popular have resumed trading down 9% after announcing plans to raise capital hike next month. plus after months of digging, the board of ex-extxstrata fina recommends glencore's offer but with conditions. shareholder vote on executive pay remains a hurdle.
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if you're just tuning in, a very good morning to you. no kelly. she's away for the rest of the week, so my apology, you've just got me. we'll try to make it as beenless as possible. and the good news is if you're long equity, they are indicated to a firmer start.nd the good n long equity, they are indicated to a firmer start.s possible. and the good news is if you're long equity, they are indicated to a firmer start. s&p 500 currently trading up 6 points above fair value. nasdaq trading some 15 points above fair value and the dow 65 points. global 300 reflecting what's happened today. currently up 13 points. european stocks that have had the best of it out of those two regions so far.
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ftse 100 p ftse 100 up a percent. cac 40 up 1.48%. the ibex not doing so well. currently down 0.9%. so how do you make money in these kind of markets? here's what some of the guests have already told us today on cnbc. >> i'm a big fan of the mexican currency. and mexico the, any kind of slowdown in china will benefit mexico. so definitely look at the mexican peso. it will definitely gain. >> i don't like bunds where they are at the moment. the one trade i'm looking at at the moment, or it's been a theme of me last week, is selling the belly of core europe.
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so that's selling fich year versus, say, two in ten or three in sevens. and in particular on on the dutch curve, selling the five year and buying the two year. >> more risk factors for the soft commodities and easing what we see easing price pressure from the grain. so we expect grains probably trading lower to end of the year and soft commodities higher in this context. >> okay. plenty to get through this morning. just reminder there's quite a few bleary eyed people in europe because of -- thank you. keep up with the camera switch. we'll be talking about the ryder cup a little bit later apparently. don't know why, but apparently did rather well with a pressure put to retain the trophy. so more on that to come, but first, china. factory activity contracted a
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bit less in september, but not enough to quiet cause it for further stimulus. private pmi readings failed to break past the expansionary 50 level. exports called as china's job market showed signs of weak penning. beijing's fine tuning measures have so far failed to boost growth. there was a rebound in export orders. those rose for the first time since june. the bank says india's manufacturers could face a big build up in inventories which might limit production in the months ahead. and china's economy may be experiencing a slowdown, but that's not affecting the outlook of the country's giant consumer class. a new saur say by the boston consulting group finds a large percentage of chinese plan to keep their wallets open over the next years and this is a big contrast to consumers in the u.s. and uk. joining us now with a first on
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cnbc look at this research is michael silverstein, partner at the boston consulting group. michael, thanks for joining us. you're also co-author of a new book being published today called the $10 trillion prize, captivating for newly affluent in china and india. so a couple things to talk about. first of all, what is the comparison between british and american consumers and chinese ones? >> chinese consumers are optimistic, excited about their future. 80% of chinese consumers say their children will live a better life. only 20% of american consumers say the same thing. american consumers are under financial stress. 51% of american consumers say they have a level of financial instability in their life. about a quarter of them are worried that they'll lose their jobs. and the opposite is true in china and india. both of which have economies that although in a slightly slower time frame now have an
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incredible eight years ahead of them as they rush to 2020. >> so scared, stressed and anxious. what is the impact of that on their spending levels? >> well, the most interesting thing is that they're not saving enough now for retirement. more than half of americans save less than 5% of their incomes. the magic number to achieve a stable retirement level is 15. and about 60% of chinese earning much less money than americans are saving 15% of their incomes. >> that's a great contrast as you say to the growth we're going to get in china and india. you're talking about maybe $10 trillion on goods and services. over what time scale is that and then how are you supposed to get into that market? >> so we've spent the last 18 months researching the $10
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trillion price. and between now and 2020, both china and india will triple its consumer markets. consumer incomes in india will go from $1,000 per capita to $4,000 per capita. from $4,000 per capita in china to $12,000 per capita in china. there will be 120, 130 million college graduates in these two countries. they will come into the market with confidence, success, and high expectations about consumption. >> are they going to have the jobs in the right areas, michael? >> so in china, the government has this great ability to say i need engineers, i need bio chemists, i need math madish shan ma mathematicians. and in those area, there will be global areas for those products and services for a value added
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economy. and, yes, there will be job mis-china amis chi jobs in china and india. >> so the thing about this book is that how you get into the right strategy. what will work for companies? can they be small companies as well as multinationals? >> this $10 trillion prize is in front of all of us. it is an opportunity for american, uk, german companies to dramatically expand their positions in china and india. it's about understanding the consumer. understanding how they live, how they dream, about meeting their needs, about innovation, about the concept that we call the perfect mix of price and features. these are not rich consumers. but they've had a history of savings. in order to get money out of
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their pockets, you have to provide them with products that they love, products where they can turn to their neighbor and say i bought this, you should, too. >> okay. michael, good to talk to you. thanks for joining us. still on to come, former unicredit boss alessandro profumo is facing a tax fraud trial 37 we' trial. we'll be in italy. we have big d. one is for a clean, domestic energy future that puts us in control. our abundant natural gas is already saving us money, producing cleaner electricity, putting us to work here in america and supporting wind and solar. though all energy development comes with some risk, we're committed to safely and responsibly producing natural gas. it's not a dream. america's natural gas... putting us in control of our energy future, now.
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board of xstrata finally recommends glencore's offer, but with important conditions on renum race. eurozone pmi points to a fresh recession. and shares in banco popular have resumed trade and they have fallen sharply after the banks announced a 2.5 billion euro rights issue. president obama continues to maintain his lead over mitt romney with two days before their first debate and 35 days before the election. new poll shows 49% of likely voters favoring the president
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versus 47% for romney. amongst all registered voter, obama holds a 5 point lead. but 52% of likely voters across key swing states favor the president. you'll be able to get full coverage of wedding who's presidential debate right here on cnbc, it starts at 8:00 p.m. eastern. a july says the rules set to go into effect october 12th won't properly justified by the cftc, the rules would cap the size of positions trading firms can take in certain commodity contracts and expand restrictions to swaps trade. meanwhile nokia has another big customer. the "wall street journal" says the company is going to unveil a deal with oracle take. the company's oracle world conference in san francisco. nokia's recently signed deals as well with groupon and amazon which dropped google maps.
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shares up marginally this morning julia got to a chance to sit down with sheryl sandberg. so tune in for that interview. shares in banco popular have resumed trading. the banks approved a 2.5 billion rights issue. it will report record write downs and has suspended its dividend due this month. this comes after an independent audit of the country's lenders show they need an extra 60 billion euros. and from spain to italian bank, alessandro profumo is set to stand trial along with 19 other executives over allegations of tax fraud. that trial taking place in milan and that's where claudia joins
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us. just remind us of how this case is laid out. let's's start with the fact that right now the judge is actually starting to hear this trial, it was scheduled for this morning. it was delayed until 1 chlt11:4. oftentimes in the first part of the trial, it does get delayed. no sign of profumo or the other defendants. 16 people from unicredit, three from barclays. this operation basically in a nutshell was allowing the banks to abuse certain laws in order to put in the books some interesting income actually as dividends. so they were paying less taxes. this is again manipulating somehow the laws. now the bank unicredit has actually plea bargained and has
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paid 265 million euros. the fraud was for 245 million is what these defendants are being accused of. and the bank did it not because they admit to wrongdoing, but because they did say that was just going to be a very long and drawn out case that they didn't want to have to deal with. on so now these defendants, 19 plus profumo. he says there was no wrongdoing and he's waiting with confidence that the justice system takes its course. note just in a few days, he is expected to take on more responsibilities at his new job which is chairman at italy's oldest and most troubled bank. he will expand his duties so he's being closely watched right now. back to you. >> all right. that's the late he is out of the trial in milan. we'll take a short break. still to come, american golfers feeling a little blue after the european stage an amazing
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comeback in the ryder cup. we'll have more details and we'll be in chicago. we'll have more details and declare that thou have broughth overmany discounts to thine customers! [old english accent] safe driver, multi-car, paid in full -- a most fulsome bounty indeed, lord jamie. thou cometh and we thy saveth! what are you doing? we doth offer so many discounts, we have some to spare. oh, you have any of those homeowners discounts? here we go. thank you. he took my shield, my lady. these are troubling times in the kingdom. more discounts than we knoweth what to do with. now that's progressive.
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europe has won golf's ryder cup at medinah. the united states -- that 6-foot put retains the trophy. in the final match, this missed effort pby tiger woods and a
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sporting concession, europe gained the half point needed to win the cup outright. so no doubt it was a late night for european fans in chicago. and an early morning for american golf fans. jack, i know you were at medinah on saturday. were there a few kind of laggards golf european golf laggards running around this morning when you came into work? >> they were last night, i don't know about this morning. it was about 3:30 when i came in this morning. but 17 and 18 at medinah can turn any golf pro into a 25 handicap. i think we saw that yesterday. >> it was amazing. just two key gains i thought was the rose pi pivotal. >> i think the americans at that point pulled defeat out of the jaws of victory, but the
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europeans did play very well. >> talking about pulling -- we'll get on to the agenda in a second. we start the fourth quarter, the dow up 4%, nasdaq up 6, s&p 500 up a 5.7. where do people go now? >> i think we have to realize may is the only month where the market was lower. which tells me there are a lot of underperforming portfolio managers. there will be cash coming in to the market because a lot of managers are sitting on on on the sidelines waiting to put that money to work. this has all the ingredients, even with all the bad news out there, we saw the pmis come out on, erg poinverything points to slowdown, but the fourth quarter is notoriously a time where you see a bit of a melt up from those portfolio managers chasing currents. many of them are well behind their benchmarks.
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so let's see how this all shapes up over the course of the next couple weeks. >> we have the ism manufacturing index out at 10:00 eastern. forecasts calling for a reading of 49.5. anything below 50 is contraction. construction spending as well. expected to rise 0.4%. how will this data play into today's trading? >> it's not. a lot of that data is behind us. we're looking ahead. everything that the fed is doing now, and of course we have big meetings coming up in athens over the course of this month, will lead us at least lead those that are managing risk to believe that the appetite for risk should be there. and more importantly, not being exposed could be very dangerous. especially if we see commodity prices and equity prices starting to feel the effects of qe-3. >> steve liesman has an interview with chicago fed president charlie evans on
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"squawk box." whether comments from fed officials be able to swing things around bearing in mind we've basically committed now every month to spending whatever it takes? >> no, i think they're committed. we want to hear essentially getting to congress a message that says our job is done. it's now up to you to make sure that fiscal policy sets a growth agenda that makes sense. that's what's missing in this equation. >> jack, good to see you. thanks for that. if you see any slightly bruised and feeling worse for themselves european golf fans, just point them to bed or something. we'd appreciate that. thanks for that, jack. good to see you. that's it, we'll leave and you look at u.s. futures. coming up next, "squawk box." we hope you have a profitable day.
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#. welcome to the first day of the fourth quarter. factory data out of europe, what are calling an inevitable new recession. in the u.s., investors are preparing for friday's jobs report and barack obama and mitt romney are hunkering down for debate prep. the two candidates square off in colorado wednesday. today is monday, october 1st, 2012, and "squawk box" begins right now. >> good morning. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen an andrew ross sorkin. the dow is almost within 5% of itl-

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